GroupM has today released its revised forecast for media spending in China, lifting its estimates for 2009 and 2010 to reflect the improved outlook for China’s broader economy.

GroupM – a global media investment management operation – now expects 2009 adspend in China to increase by 5.8 per cent to RMB254.5 billion, and by 9.8 per cent to RMB279.4 billion in 2010, with Internet spending expected to lead the way. The figures update GroupM’s previous forecast of 3.2 per cent in 2009 and 8.9 per cent in 2010, issued in June this year.

Economists, including those from the World Bank and Goldman Sachs, have recently raised their forecasts for Chinese GDP growth by about 1.5 per cent, with the consensus view now seeing the Chinese economy growing around eight per cent in 2009, then returning to double digit growth next year.

Bessie Lee, CEO, GroupM China, said: “The pessimism that surrounded the outlook for the Chinese economy as we entered 2009 appears to be passing. Confidence and revenue have returned to the broader marketplace in the second quarter as key sectors increased spending patterns.”

China saw media investment growth of 22.6 per cent in 2008, driven by strong economic performance and additional impetus derived from the Beijing Olympics.

Government restrictions on outdoor advertising in the key cities surrounding major events, especially in Shanghai in preparation for the World Expo next year, will cause many Out Of Home (OOH) media suppliers to withdraw from the market. With less competition and inventory, OOH media suppliers with substantial market share will become even stronger, giving media suppliers more bargaining power, says GroupM.

Looking to 2010, China’s media spend is expected to see support from two major events – the World Expo in Shanghai and the Asian Games in Guangzhou. These events, coupled with China’s fast growing economy and its increasingly wealthy consumer base, suggest more optimism about the prospects for the Chinese media market in 2010.

Lucy Zhang, Futures Director, GroupM Knowledge, China, added: “We think it is likely that media investment in 2010, while failing to reach the dizzy heights of 2008, will far exceed the growth rate in 2009.”

The Internet is expected to be the fastest-growing advertising medium in both 2009 and 2010. China currently has an estimated 338 million Internet users, easily surpassing the US as the world’s largest Internet community. The number of online homes is growing by nearly 88 million every 12 months, the equivalent of a country the size of Germany or Vietnam.

The rising online population, the continual effectiveness of traditional television and consumer diversity mean the China media market will continue to be among the most exciting and challenging in the world, says the GroupM forecast series, This Year, Next Year. Due to its size and diversity, China is no longer seen by marketers as a single entity, but a collection of evolving, complex and fragmented markets.

Zhang added: “In 2009, advertisers’ options have multiplied correspondingly, especially in digital, events, video, sponsorship and other branded content opportunities, all offering new ways to reach and interact with consumers. How agencies and advertisers capitalise now on this change and manage the balance of traditional and contemporary media will be key to moving forward.”